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Saturday, August 12, 2017

"Land-Banking" on London

Britain, beset by a rising population, needs houses more than ever. Robby Du Toit, managing director of the property company Sellhousefast, explained that while house prices have risen 259 percent in the past 20 years, wages have only risen 68 percent, leaving homes largely unaffordable for the average earner. According to Du Toit, the average cost of buying a home in London is now 14 times more than the city's average wage of £33,720 -- the highest disparity on record. Put simply, unless you're on an extremely high salary, you can't afford to buy property in London.

"We know that the capital is becoming more polarised," Du Toit said. "Numbers of households considered wealthy have shot up and so have households considered poor, leaving a shrinking middle. London is the wealthiest yet most unequal part of the UK." Du Toit said that those who come to buy property assets in London nowadays are almost exclusively part of that top 1%.

The number of homeless residents has risen for a sixth successive year, with London accounting for 23 percent of England's homelessness. 170,000 British families in the capital are living in hostels, B&Bs, and temporary accommodation, unable to afford a home. Recent government figures show around 1.4 million homes have been lying vacant in the UK for at least six months -- the highest level of "spare" homes in two decades.

At the same time, London has witnessed a staggering 456 percent increase in "land banking" over the last 20 years. Kensington and Chelsea -- London's richest borough, where the Grenfell Tower tragedy took place -- has the highest number of empty homes.

Land banking in London has long been exploited by the super-rich. In 2014, one-third of the mansions stood empty on Bishops Avenue, a single street in north London that has been dubbed "Billionaires Row," which ranked as the UK's second most expensive street with an estimated £350 million worth of empty properties. A row of mansions -- believed to be owned by members of the Saudi royal family -- has stood virtually unused since being bought by investors between 1989 and 1993.

Developers are also purchasing land -- though not building on it -- then selling it for a tidy profit. A Guardian investigation on land banking revealed that in 2015, developers were sitting on 600,000 plots of land with planning permission. That was four times the total number of homes built during 2016. As the report made clear, the average price of land in Britain with planning permission for housing is around £6 million per hectare -- making land banking an extremely lucrative venture.

In June, the housing charity Shelter issued a report warning that 1 million families are at risk of becoming homeless during the next three years. The group said that escalating rent costs, freezes to benefits and a lack of social housing was increasing the evictions and homelessness in the capital.

Only one application has been made to re-vacate the empty homes since 2006, the year that Empty Dwelling Management Orders were established in the UK, giving local authorities the power to put unoccupied property back into the market as liveable housing. The refusal by local councils to use similar powers to help solve the housing crisis is "disgraceful," according to Lucy Pendleton, director of James Pendleton estate agent. "It's even more disturbing to find that applications have been dropped to zero in London, where the high cost of living and severe, long-standing imbalance between supply and demand makes these powers even more urgent," Pendleton said.